Al Neyer raises $110 million fund for development
Al Neyer, one of Greater Cincinnati’s most active industrial developers, has closed its first real estate investment fund, raising $110 million.
The downtown-based commercial real estate and design-build firm closed Al Neyer Industrial Fund I LLC on April 1. Launched with a goal of raising $100 million, the fund ended up surpassing that by $10 million. The fund is expected to be used to develop class A industrial projects totaling about $300 million.
Jen Weingartner, vice president of capital and investor relations at Al Neyer, said a private equity fund is something the company has been discussing for a while. Previously, Al Neyer would raise equity on a project-by-project basis.
As Al Neyer expanded into the Raleigh market a few years ago and the number of industrial projects it is working on increased overall, the previous method of going to a group of friends and family investors once a project was ready became more difficult.
“Raising the equity deal-by-deal as that pace and volume increases is just a little bit harder to keep up,” Weingartner told me.
Plus, Al Neyer’s projects range in size, from 150,000 square feet to 1 million square feet. Those varying projects have varying equity requirements and not all investors have a chance to invest in each project.
The fund structure will give investors an investment in a diversity of industrial projects. Al Neyer will use the equity in a variety of projects, both in terms of size and type, as well as geography. The focus with Fund I will be bulk product, rear-load and single-load product, and last-mile industrial. The developments will be located within the company’s four growth markets, Cincinnati, Pittsburgh, Nashville and Raleigh, as well as markets within 300 miles of Al Neyer’s existing footprint.
Al Neyer has a pipeline of more than 12 million square feet of potential industrial space. Weingartner said Al Neyer has a strong development pipeline of industrial projects in all four of its markets.
The fund has 105 investors, who had to invest a minimum of $500,000. Al Neyer has a large group of investors in Cincinnati, but it also pulled a large number of investors from the Pittsburgh, Nashville and Raleigh markets.
Weingartner said the goal is to start deploying this fund as soon as May or June of this year.
“We’re ready to put this money to work pretty much immediately,” she said.
Al Neyer plans to use debt along with its equity, which is expected to range from 60% to 75% depending on the project. That would allow the $110 million in equity to result in about 10 to 15 industrial projects with a total cost of about $300 million.
The fund also comes at a time when e-commerce is growing at an explosive rate and reshoring is bringing manufacturing back to the U.S., Weingartner said. Those two demand drivers helped Al Neyer identify opportunities for investment in industrial real estate.
The fund structure won’t change Al Neyer’s strategy for industrial development, which has been to secure land, start development and construction, get the buildings leased and then typically sell them.
“There is high demand for industrial product right now,” Weingartner said. “We see that demand continuing, and we will keep driving our strategy forward.”
Weingartner said Al Neyer is looking to fully deploy Fund I in about 12 to 18 months.
One local project that will use equity from Fund I is the planned $65 million speculative development between Elijah Creek Road and Petersburg Road in Hebron.
With the level of interest from investors on this first fund, Weingartner said the company is looking at additional funds, though Al Neyer plans to have all of the first fund deployed before launching a raise for a second fund.
“Our hope is this is the first of many funds in the future for the company,” Weingartner said.